Health care projections for the new year

Now that the House and Senate have passed remarkably similar health care bills, what is the probability that the President signs health care reform this year? 75%? 95%? 99%?

It’s high. Very high. I am struggling with this question, and at the moment estimate 85%-90%. This may be shaded low by wishful thinking, but I think there is more uncertainty than most in Washington might assume.

Everyone likes it when I pick a specific number, but I think it’s more useful for me to explain the forces that I think will drive success or failure. Policymaking and legislating is always dynamic, and it’s far more useful if I share some tools that can allow you to make your own assessment. At a minimum, you can be a well-informed observer of (or participant in) the process as things change over the next several weeks.

I oppose this bill. I would prefer a very different kind of reform to current law, and, as flawed as it is, would prefer current law to the bills that have passed the House and Senate. Nevertheless, I will here use “success” to mean the President signs a law, and “failure” to mean he does not.

Factors contributing to likely legislative success

I will list the most important factors first. The ranking is important.

• The House and Senate have each passed remarkably similar bills. Sure there are high-profile differences, but these bills are overwhelmingly similar. The differences are small relative to the change either bill would make to current law. These are huge bills, but substantively they’re not that far apart.
• 219 House Democrats (and one Republican) and 60 Senate Democrats have already voted aye on final passage of one of these bills. For each of these Members, the easier path is probably to vote the same way they did last time. Changing to a no vote means they have to explain their flip. Speaker Pelosi and Leader Reid and their whips can think of their vote-counting exercise as “How many votes do we lose from 220/60 we have if we do X,” rather than “How do we build up to 218/60 votes.” I assume the overwhelming majority of the House and Senate Democratic caucus can be taken for granted as an “aye” vote, assuming the substance ends up somewhere between the two bills. (No member would ever admit that their vote is independent of substance, of course.)
• The President must have a signing ceremony, especially given a weak economy, exploding deficit, a new terrorism issue breaking against him, and three recent Democratic retirements or flips. It’s fairly clear that the White House will do whatever is necessary to achieve that goal. They have a lot of resources and tools they can bring to bear.
  • The President has indicated his support for both bills, and will presumably support any compromise that can pass both Houses. The binding constraint is therefore 218 & 60, not any particular policy element, allowing the Leaders tremendous policy flexibility they need to get votes. It also means the conference report will likely have even more warts than either the House or Senate-passed bills.
  • The President, his staff, and both Congressional Leaders are clearly indicating that the window is open. Hint for reporters: don’t just look at the deals inserted into this bill. Look for White House commitments that are executed outside of this legislation. Look for press releases from Members of Congress about particular projects, hospitals, or other spending opportunities in their district. There can be several different types of deals made by the White House and Congressional leaders to secure a Member’s vote:
    • a change to a health policy element of the bill (e.g., how much should we pay rural hospitals, or what size construction firm should be exempted from the employer mandate);
    • targeted spending in the bill (e.g., Nebraska’s Medicaid FMAP giveaway, special treatment for Blue Cross / Blue Shield, or provisions targeted to provide funding to specific hospitals, each of which will be somewhat cleverly and disguised with inscrutable legislative language);
    • targeted spending outside the bill (e.g., we’ll build that bridge in your district using funds already appropriated in other laws);
    • unrelated policy commitments (e.g., a rumor that the Congressional Hispanic Caucus might back down from their demand that the bill cover illegal aliens, if the President commits to push immigration reform within a certain timeframe);
    • political commitments (e.g., the President or VP or First Lady will come to your district and do a policy event or a fundraiser).
• The President has at least twice demonstrated his ability to rally Members of his party to be more flexible and cooperative, in his early September speech, and in a more recent closed door meeting with Senate Democrats. The President’s poll numbers are soft, but Members of his party will still follow his lead as best they can. Even Democrats who need to vote no want the President to succeed, and no Democrat will want to be the swing vote who prevents the President from getting 218 or 60. This means direct pressure by the President, through phone calls and Oval Office meetings, should be quite effective.
• Outside liberals appear split into three factions: (1) support the agreement, whatever it is; (2) move it left now, but then support whatever they come up with; and (3) kill the bill. As long as outside liberals are not unified in (3), Congressional Leaders probably don’t have to worry about a revolt from liberal Members. Governor Dean’s opposition is less effective than it was 3-4 weeks ago.
• The President and Congressional Leaders have smartly avoided creating a new deadline and have lowered timing expectations. They have explicitly rejected the State of the Union as a deadline and are signaling that a deal may be possible in February. While this eliminates an opportunity to pressure their Members with an artificial deadline, it also means they cannot fail to make a deadline that doesn’t exist.

Factors contributing to possible legislative failure

Again, I will list the most important factors first.

• The vote margins are razor thin. If two House Democrats or one Senate Democrat believe their previous aye vote will cost them their seat this November, there could be a huge problem. The average level of support among Democratic members is irrelevant. What matters is how the most nervous Members who previously voted aye will vote. Speaker Pelosi has little margin for error. Leader Reid has none.
• (Democratic) Members are back home in their States and districts. We have no idea what they are hearing from their constituents. Will any of these Members return to DC and feel they need to “correct” their previous aye vote? We know that national polling says these bills are unpopular, but what matters is the direct pressure felt by Members from their constituents, and how that pressure affects the behavior of those Members. There was a huge tidal effect in August, which the President stemmed with his early September speech. Now I think it is the biggest and most important unknown.
• Why are they moving so slowly? Friends are telling me there is little serious work being done this week, even at the staff level. This gets harder the longer it takes, because interest group influence and outside political pressure have time to build and force Members to make demands: “I can vote aye only if you do X.”
• When Congress left town by December 24th, health care was maybe #3 on the Washington/national issue agenda, behind economy/jobs and the deficit. In less than two weeks, terrorism and Democratic retirements have reshaped the Beltway narrative, pushing health care down further. This is quite unusual, and it’s astonishing that reshaping 1/6 of the economy isn’t the top agenda item, but that appears to be the developing inside-the-Beltway reality. I think that makes it slightly harder to pass a bill, but it could push in either direction.
• Congressional Republicans have been surprisingly energized and effective. Their attacks have to a large extent shaped the public debate. I remember when most Republicans were afraid to talk about health care. That is no longer the case. Their greatest assets are their intensity, the breadth of participation from their Members, and the strength of their policy arguments. They have been far more effective than I had anticipated, especially given how outnumbered they are. If they continue applying intense pressure over the next 3-6 weeks, they may be able to affect the outcome.
• Even if they don’t, Congressional Republicans and their outside allies appear to be building toward a long-term strategy. The stimulus was a Presidential victory last February that has since been redefined to be a policy question mark and a political minus for its supporters. These health bills start from a much weaker policy and political starting point, and if Republicans and their outside allies continue to pound away even after a signing ceremony, there will be long-term policy and political effects that are now impossible to predict. Nervous Congressional Democrats should worry that their opponents will highlight this issue in November, and implementation foul-up stories are ready-made for ongoing press coverage. This is reinforced by policies which front-load the tax increase pain and don’t deliver subsidies for several years. I won’t go so far as to say that this will be a reenactment of the repeal of the Medicare Catastrophic Coverage Act of the late 80s, but the seeds are there.
• CBO is now well-established as a scorekeeper and referee. This is the one area where the policy can be determinative, because the Leaders need a “good” CBO score to hold votes.

If the Speaker and Leader Reid were in town for the next two weeks aggressively driving this process forward, I would estimate a 99% chance that they succeed. But their apparent slow pace, razor thin vote margins, the shifting macro agenda, and the uncertainty about Member feedback make the President’s legislative success less than certain. Betting on a signing ceremony is still a smart wager, but I’d take 7:1 odds against.

(photo credit: Christopher Chan)